Finance Bill 2018: Second Stage (Resumed)

In the context of taxation, the imposition of increased betting duty could have an unintended consequence. Large chains of betting shops are able to absorb betting duty through a reduction in profit rather than passing the cost to consumers and some can cross-subsidise it through their online profits. For the information of the officials who are with the Minister of State, an examination of the accounts of a small betting shop over a two-year period show that it will have a betting duty liability of over €340,000 for each year, an amount that significantly greater than its profit margin. An unintended consequence of the increase, if it is not passed on directly to the consumer, is that the smaller outlets will suffer but the bigger operators will quite easily absorb it into their cost base. I ask that this be addressed or that there be an indication by the Government regarding how the measure will work because we must try to speak for the smaller, independent high-street outlets, particularly the intergenerational or family interests which are rapidly going out of business because their cost base is increasing dramatically.

Section 51 looks a little like a sop to the Minister for Transport, Tourism and Sport, Deputy Ross. Some €320,000 of an inheritance will now be tax free, up from €310,000, at an annual cost of €8.1 million. If the extra €10,000 were taxable at 33% under capital acquisitions tax, this would yield €3,333 per transaction. Dividing the €8.1 million annual cost by that €3,333 yield per transaction indicates that approximately 2,430 people will benefit annually from this tax cut. One can bet that these individuals are in the top tiers of society in terms of income and wealth. It will not be ordinary people who will benefit from this measure but, rather, those who have real wealth.

On capital acquisitions tax, section 50 seems to deal with tax avoidance such that people with a beneficial interest in a dwelling held by a trust will not be able to avail of a tax exemption on inheritance tax. It would be good to know more about that provision. Is there routine tax avoidance by wealthy individuals who own multiple properties and set up such discretionary trusts to avoid their children being subject to inheritance or gift taxes? I would like to hear more on this proposal.

The Minister of State, Deputy D'Arcy, might remember that a few weeks ago I raised the issue of tax expenditures with the Taoiseach on Leaders’ Questions. I put to the Taoiseach that all 11 or 12 budgets introduced by Fianna Fáil and Fine Gael during the decade or more of austerity were accompanied by Finance Bills which provided for continually massive tax expenditures. I refer to briefing paper 13 of 2018 by our diligent and excellent Parliamentary Budget Office, which estimated basic tax expenditure costs at over €5 billion in 2016, rising from €4.7 billion in 2014. Of course, the Department of Finance only began reporting on these vast expenditures in 2014. Members received the Department’s report on the 2017 expenditures on the day after the budget was introduced as opposed to with the rest of the documents relating to the budget.

Data on these expenditures are deficient and many of them have not been subjected to review for many years in spite of the recommendations of the 2009 report of the Commission on Taxation. The scale of the expenditures is remarkable. For example, the research and development tax credit cost an estimated €670 million in 2016, capital acquisitions tax agricultural relief cost €141 million in 2017 and a range of reliefs supporting business cost nearly €560 million in 2015. The Parliamentary Budget Office rightly declares that tax expenditures represent a departure from the equity principle of taxation and that an illusory fiscal effect is produced when such expenditures are perceived as tax cuts as opposed to what they are, namely, spending increases.

When I survey the Bill, it reminds me - as has been the case with every Finance Bill introduced since I became a Member of the House - of the vast scope of tax expenditures provided for in the Taxes Consolidation Act 1997 and developed over the years leading to this point. The Minister for Finance, Deputy Donohoe, will argue, as he did earlier in the day, that much of the Bill is an attempt to close out tax loopholes and strengthen anti-tax avoidance measures. However, the sheer detail of section 23, which addresses tax relief for investment in corporate trades, section 24, which includes amendments to tax relief for investment in films, and section 25, which implements Articles 7 and 8 of EU Directive 2016/1164, makes it very difficult for ordinary citizens to assess the net costs and benefits to the Exchequer. The presentation of the budget and the Finance Bill must be addressed in a far more transparent and open manner.

The Minister tried to quantify income tax and some other changes on budget day. However, I seek clarity regarding the Government estimate of the tax expenditures included in the Finance Bill and, indeed, overall tax expenditures in 2017 and likely expenditures in 2018. I read the 2017 report, which focused on a number of major expenditures rather than providing an overall view of what current tax expenditures amount to.

The greatest anger directed at the Government in the recent weeks in the context of the budget relates to section 21, which provides for the amendment of section 97 of the principal Act regarding computational rules and allowable deductions. Under section 21, residential landlords will be permitted to deduct from their rental income 100% of the interest on a loan used to purchase, improve or repair rental residential premises. Up to this year, the relief was capped at 85% of such interest. Section 97 (2J) currently allows for a loan interest cap of 90% for 2019 and 95% for 2020. Why was this change a priority for the Government in light of the continuing relentless rise in domestic household rents and the its ideological refusal to address the fundamental issue of supply of housing, which should be driven by State and local authority direct development and construction? The Residential Tenancies Board annual report for 2017 shows that almost 50,000 landlords control two or more tenancies. This tax relief is squarely aimed at those hugely profitable businesses rather than the so-called accidental landlords spoken of lyrically by a colleague of the Minister of State opposite, namely, the Minister for Housing, Planning and Local Government, Deputy Eoghan Murphy. Will the Minister of State outline the cost of this concession in tax expenditure terms and provide an estimate of the total cost of section 97 (2J) of the Taxes Consolidation Act 1997? Section 21 of the Bill is just another example of how Fine Gael and Fianna Fáil remain completely in thrall to their big property and landlord backers and, indeed, to the Members of this House who are landlords and who, therefore, have something of a vested interest in the matter.

Many constituents believe that Airbnb lettings could not have been tax exempt under the rent-a-room scheme introduced by Charlie McCreevy where a householder can earn up to €14,000 per year tax free from renting out a room in their house. The new "28-day rule" provided for in section 22 amending section 216A of the 1997 Act states that the room must be rented out for at least 28 days and expressly excludes short-term lettings from the incentive. Last month, AirBnb reported that 640,000 guests used AirBnb in Ireland during the summer months. It has been estimated that this and other regulatory measures will return around at least 1,000 units to longer-term rental use.

The changes to the USC and standard rate and home carer credit in sections 3, 4 and 5 are also welcome. In my own pre-budget submission to the Minister, which we called "A Budget For All Our People", I asked for an increase of €1,000 to €35,550 and €44,550 in the income tax standard rate bands, which was costed at €168 million in the first year and €195 million in a full year. I argued that it would alleviate current economic pressures on individuals and families who are genuinely hard-pressed to make ends meet. I thank the Departments of Finance and Public Expenditure and Reform for providing a facility for those of us on the Opposition benches to cost some of the ideas we had and some of the ideas we thought were coming forward in the budget. This was very valuable and we are grateful for it. I also believed that a modest increase in income tax credits - perhaps at a cost of €100 million - would have further encouraged hard-working citizens and their families. Given the serious risks Ireland faces in 2019, I thought that a modest indexation of USC rate bands and exemption limits at a cost of perhaps €40 million might have been preferable to a further cut in rates, as advocated by Fianna Fáil and which is now before us, so I welcome sections 3 and 4 in this context. I note that the budget estimated the USC cuts at €123 million in a full year and the increase of €750 in the income tax standard rate band at €161 million in a full year.

Budget 2019 was generally very disappointing to citizens with disabilities. The €150 million or so that the Government came forward with seems to have been about addressing the demographics of our citizens with disabilities rather than introducing the cost of caring. The informal Oireachtas committee on disability estimated it would cost €20 per week. All the Minister did this year was set up a study that will cost €300,000. However, I welcome the increase in the home carer tax credit from €1,200 to €1,500. I also welcome sections 5 and 6 with regard to compensation payments for the victims of the Magdalen laundries and others and benefit-in-kind relief for our Defence Forces with regard to accommodation and medical treatment.

The Minister deliberately avoided increasing carbon taxes in budget 2019 or even addressing the disparity between petrol and diesel-fuelled vehicles. Section 9 does extend the exemption for electric vehicles down to the end of 2021, although it rightly applies a cap of €50,000 on this exemption.

Section 11 amends section 128F of the 1997 Act which provides for favourable tax treatment of share options granted under the key employee engagement programme, KEEP. We have heard a lot about this programme in the past year from the Minister's colleagues in the Department of Business, Enterprise and Innovation and the Minister. One of the questions I submitted for oral parliamentary questions is whether the Minister for Finance will indicate how many companies and employees availed of KEEP so far in 2018 and what impact he expects to result from his proposed changes to the scheme in 2019. Media reports have called the programme "woefully unsuccessful". There has been an inference, which the Minister of State might be able to confirm, that not even one company had applied for this tax relief. The Minister acknowledged the low take up during his own speech on budget 2019 saying that he was "taking early action" to address it. Of course, KEEP was introduced last year with the Finance Act 2017 and section 128F of the Taxes Consolidation Act 1997 provided that gains realised on the exercise of qualifying KEEP options by employees and directors will not be subject to income tax, USC or PRSI where the requirements of section 128F of the Taxes Consolidation Act 1997 are satisfied. However, capital gains tax is payable on the disposal of the shares. Section 11 now replaces the €250,000 limit in any three consecutive years of assessment with a lifetime limit of €300,000 and the limit of 50% of the annual emoluments in the year of assessment is now being increased to 100% of the annual emoluments so it will be interesting to see how these changes pan out.

Under section 56, from 1 January 2019, there will be significant changes to the operation of PAYE under the modernisation programme that has been undertaken by Revenue. Employers will now need to calculate and report on the pay and deductions of their employees as they are being paid in real time. It is said that this modernisation will improve the transparency and accuracy of the PAYE system. It is expected that approximately 200,000 employers will have to implement these changes, the biggest change in reporting in around 60 years. Of course, the first deadline of 31 October is fast approaching. From some of the feedback we have received, there does not seem to have been sufficient communication with, and assistance to, employers in getting ready for these changes. Perhaps the Minister might address this. Those employers who have not yet engaged with Revenue and who miss the first deadline of 31 October will be contacted by Revenue. Even then, it appears that the take up has been very low. It is heartening that the changes in section 77 and Schedule 1 of the Finance Act 2017 will require employers to file a monthly USC return alongside the current requirement to file an income tax return. Of course, the additional superannuation contribution will also be payable by public servants in accordance with Part 4 of the Public Service Pay and Pensions Act 2017 starting on 1 January 2019.

In my own pre-budget submission, I urged an increase in betting duty from 1% to 3%, which would have yielded €156 million in a full year. I also believed that Ireland should at least begin to equalise the levels of excise on petrol and diesel and I note that even a modest 5 cent increase in diesel excise would have yielded €165 million in a full year. In the event, section 33 increases betting duty to 2% for bookmakers and remote bookmakers - I note the arrangements for remote betting intermediaries - which the budget books estimate will raise nearly €52 million. Section 35 does, of course, introduce a 1% VRT surcharge for diesel engine passenger vehicles from 1 January next and is estimated to raise €25 million in a full year.

Based on the booming state of the hospitality industry, the Department of Finance assessment report, which we read carefully in the Committee on Budgetary Oversight, and the strong arguments advanced by the Irish Congress of Trade Unions, I argued in my own pre-budget 2019 submission that the VAT rate could be generally increased to 11% or 11.5% and the latter rate would have raised an additional €289 million for the Exchequer. Since the Minister and his Fine Gael Government were so averse to any significant effort to broaden the tax base by requiring more tax contributions from the very highest paid cohorts - I recommended changes for those earning over €120,000, particularly those earning over €150,000 - or to any initial steps to broaden carbon-related taxation, the Minister ultimately decided in one go to jump back to the 13.5% VAT rates for the hospitality sector and related businesses in a single budget in section 41 before us in the Finance Bill 2018. Like other Deputies, I have received serious complaints from small restaurants, hotels, hairdressers and other businesses that feel that given the anxieties about the effect of Brexit on tourism, the Minister might have adopted a phased or stepped approach to this change. I note and welcome the continuation of 9% for newspapers and the new paragraph 7A in Schedule 3 of the Valued-Added Tax Consolidation Act 2010, which applies to electronic publications. What does the Minister estimate will be the net additional revenues for the Exchequer in 2019 arising from section 41? I note that a colleague who spoke earlier attributed the changes in section 51 to the influence of the Minister for Transport, Tourism and Sport but we heard before the budget that there was a lot of canvassing from Fine Gael in respect of section 51 and that Fine Gael as a whole was very disappointed with the Minister's decision to increase the Group A tax-free threshold in respect of capital acquisition tax from €310,000 to €320,000.

Many citizens will look at this Finance Bill and continue to be seriously worried at Ireland's great dependence on corporation taxes from a small number of huge foreign multinationals.

They are also deeply concerned that the strong perception that the tax avoidance industry will remain untroubled by this Bill and that Ireland continues to be referred to as a tax haven in international studies like those conducted by Oxfam and others. While providing strong incentives for start-ups, section 23, which, with sections 24 and 25, makes up the bulk of the Bill before us, seems to include a serious attempt by the Department of Finance and Revenue to tighten up reliefs in schemes like the employment investment incentive, EII, scheme and the start-up relief for entrepreneurs, SURE, scheme. I also note the anti-avoidance provisions, that there seems to be provision for clawback of incorrect self-certified returns, and that EII and SURE are extended to the end of 2021. What are the latest estimates for tax expenditures under this section and the likely overall impact of these changes, including on promoting jobs, because that is what it should be about, which make up a large part of this Bill?

Film tax expenditures cost nearly €90 million in 2015. I notice the time-limited, tapered regional reliefs in section 24. How will they impact on tax expenditure? Section 25 refers to controlled foreign companies and is said to be an anti-tax evasion measure. The Minister said it is part of our international obligations under anti-tax evasion measures. We voted on the new anti-tax avoidance directive rules on budget night and the Dáil approved the 12.5% tax which many of us supported because we thought it was at least a start. It is for unrealised gains where companies migrate or transfer assets offshore. The Minister of State might explain how the new broadly based exit tax improves on what he called the pre-existing focused anti-avoidance exit charge that he referred to earlier tonight. What is the difference resulting from this very long section? The controlled foreign company rules in the detailed section 25 insert a new part 35B into the principal Act, but I notice that in the new chapter 3 there are very significant exemptions applied to the application of this new exit tax and perhaps the Minister will respond on the reasons behind such exemptions. The Minister said tonight that these measures in section 25 fulfil our commitment under the corporation tax roadmap, but constituents will ask whether this section finally begins to address tax evasion structures such as, for example, the single malt and other devices to evade taxes in our jurisdiction. That is something the Minister of State and the Minister might respond to as the debate proceeds.

Many constituents are also alarmed by the recent reports from the United Nations Conference on Trade and Development, UNCTAD, showing the total foreign direct investment inflows to the State declined by €71 billion in the first half of 2018. This follows the so-called Trump tax reforms and highlights the failure of the Government to broaden the Irish tax base. The Minister of State and the Minister might have had an opportunity to read the report entitled Budget 2019 - Issues for Members of the Houses of the Oireachtas produced yesterday or the day before by the Parliamentary Budget Office, PBO. That report raises significant problems with the publication of the budget and of this Finance Bill 2018. Besides querying whether the Minister has placed his total faith in an orderly Brexit and whether he is pursuing a countercyclical stance, the PBO raises important issues in the estimation of Votes. For example, can we believe the amounts estimated for the Department of Health or the Department of Justice and Equality? It has requested major improvements in the accessibility, accuracy and consistency in the reporting of budget information. The PBO identifies several errors in the document entitled Budget 2019 - Economic and Fiscal Outlook. Is the Department aware of this and beginning to address it? It asks that, once the text has been amended, the corrected information should be laid before the Oireachtas. It is a very serious charge that there are inaccuracies in documents presented to us along with the budget. The PBO welcomes the announcement made in respect of green budgeting and also asks for much greater progress in respect of equality and gender budgeting. We had a debate last Thursday on that matter.

On some of the questions asked in that report, for example, the publication of a fully costed estimate for Brexit contingency measures, we are almost as vague as Theresa May's backbenchers on what will be the cost. The Minister of State might say that she says the divorce deal is 95% done but what kind of money are we talking about? Why are the Supplementary Estimates already included in Parts 1, 2 and 3 of the budget 2019 expenditure report? The PBO asks why Supplementary Estimates which were not approved by this House should be included in that report. Why, for example, is the Christmas bonus not included in the 2019 allocations? Is that not misleading Dáil Éireann? I hope the Minister of State and the Minister will respond to these criticisms. They are also very welcome to attend the Committee on Budgetary Oversight at an early date to answer all the questions rightly raised by the PBO. There are several welcome measures in the Finance Bill 2018 but there are also huge lacunae and gaps, particularly on tax expenditure. We need much fuller information and all the figures so that we can properly conduct the finances of the nation.

I am pleased to speak on this Bill which seeks to give effect to the taxation changes announced on budget day. The Bill also provides for the budget day announcements of a reduction to 4.5% in the 4.75% rate of universal social charge, USC, and an increase in the ceiling at which the 2% rate of USC is payable. We know from the Economic and Social Research Institute, ESRI, that income tax, including USC, is the largest individual source of tax revenue in Ireland, accounting for over 35% of the total. Fluctuations in this source of revenue have a significant bearing on the total tax revenue. The research also finds that income tax revenue automatically increases by 2% for every 1% increase in taxable income. For USC, revenue automatically increases by 1.2% for every 1% increase in taxable income. The results imply that income tax revenues are more sensitive to economic fluctuations than the revenue arising from USC.

While this might appear to be a reason for the Government to leave the USC intact and not seek to abolish it, given how stable a source of income it is, I do think we need to reconsider that position given how hated the tax is among ordinary workers. Hated is the proper adjective, and the Minister of State must know that. It is hated, it is punitive and it is very hard on low-income earners. It is a grossly and inherently unfair system. It was introduced for a short time but, like everything else, it is a source of confidence and supply such as the Government has from Fianna Fáil. It is too cushy for the Government and it does not want to do anything with it for the ordinary people. I would not expect much different from Fine Gael.

I note that the Finance Bill also provides for an increase in the home carer tax credit and the earned income tax credit. This will certainly bring partial relief to the many thousands of people who are affected but it most certainly does not go far enough. Family Carers Ireland has described the budget as bitterly disappointing while acknowledging that the modest €5 increase in weekly social welfare payments to some carers will be a small help. It also accepts that other measures are a step in the right direction, such as the €300 increase in the home carer tax credit, reduced prescription charges for those aged over 70, a €150 million increase in funding for the badly needed disability services, €55 million in additional funding for mental health services, which is very badly needed because there is an endemic mental health problem, and an extra €20 million for the National Treatment Purchase Fund, which will not go anywhere, with people languishing in all kinds of queues. I hope the €55 million for mental health care will be spent on mental health and that there will be a seismic shift towards spending it on therapies and counselling rather than, as most of it is at the moment, on pharmaceuticals and medicines. We need a full re-evaluation of how we deal with mental health, not dishing out prescriptions willy-nilly and greasing the fat paws of those in the pharmaceutical industry.

Family Carers Ireland also says that there are many family carers who may not have seen any benefit from this budget. This is especially true for families juggling paid employment and a caring role, young carers and full-time carers who are not in receipt of carer's allowance due to means testing. They do not get a shilling nor a cent. This is an issue that must be dealt with, especially in light of the findings I highlighted earlier this year that found 7,041 people stated that they provided regular unpaid personal help for a friend or family member. That is a staggering figure and we are lucky to have them. We should praise them and try to support them, not penalise them.

Where would our hospitals be if those 7,041 volunteers were not there? We must look at that.

There is another issue with disability in my county. The initial finding that 138 carers in County Tipperary are aged under 15 is deeply concerning. This situation demands immediate examination. They are little more than children - little adolescents. They should not be expected to be caring. While it is certainly wonderful that they would be interested in caring or helping out, ag cabhrú leis na daoine aosta, it is not appropriate to have that burden placed on them. They need to be in school and at play, involved in sport and other activities their siblings, colleagues and friends are doing, not having the arduous burden of having to care for others. This is disgraceful.

These statistics demonstrate the clear need for Government to prioritise and fully resource carers' needs. It needs to ensure they are provided with every level of assistance possible, which is clearly not happening when young people feel obliged to do that. While, as I said, it is good to look after their loved ones, they should not be the sole carer inhibiting their education, creativity, and participation in sport, music, song, dance, literature, theatre or any activity they enjoy. They should not be tied into houses looking after people.

With a sector of our society providing more than 250,000 hours of care every week - not every year - it is very clear that the work they are doing is of fundamental importance. Without them how would our hospitals and nursing homes operate? We would not cope if those 250,000 hours a week were not provided. We need to show respect for that. It is keeping people out of hospitals and keeping them where they are happiest in their homes where they can make a better recovery. That needs to be reflected in the Government's approach to carers and their families in the future. It is a missed opportunity.

We also note from reports today by Eilish O'Regan that the people in need of HSE home-care packages are waiting for more than two years in some cases for the service while the average delay is three and a half months. A damning new report reveals today that the current waiting list for home-care packages is 6,100. Where is the Government's moral compass? Has it sunk that low looking after the fat cats and everybody else that it ignores these people who have given so much service to the State? They have paid their taxes, raised their families and housed themselves. These people are waiting when they need it most when they are vulnerable, ill and feeble. Some 6,100 are on a waiting list with some of them waiting up to two and a half years.

Eilish O'Regan and other journalists have exposed this, but it is like water of a duck's back for the Minister of State, Deputy D'Arcy, and our Teflon Taoiseach, who is good for spin and PR. As Deputy Naughten said when he resigned ten days ago, the Taoiseach is interested in optics rather than fibre optics and opinion polls rather than telecoms poles. He has an obsession with that. He had the audacity to put a €5 million spin machine in place at the beginning of the year. He, mar dhea, withdrew it, but we are not fooled; we know he still has it. He is like a spinning top. He keeps spinning until he goes out of control and he will fly off it some day in a heap, briste agus caillte. It is disgraceful to have that kind of waiting list and the Government should be ashamed of it.

It is reported that pensioners are finding it more difficult to access home care than was the case a decade ago. The Minister of State and his colleagues have been in government for seven years. When they came to office, it was a case of what they were not going to do while there but it is now more difficult for pensioners to access home-care packages than it was ten years ago. What are we doing in this country? Where are we going? Where is the moral compass? The Minister of State does not have it. If he has it, it is in the soles of his shoes or someplace else? It may be in a spin office up in Government Buildings.

The findings are taken from an investigation by Care Alliance Ireland. I salute the family carers and Catherine Cox. I also salute Councillor Richie Molloy, a manager for family carers in south Tipperary. Care Alliance Ireland executive director, Liam O’Sullivan, estimated there is a gap of 18%, or 4 million care hours, between what is needed and the service people receive. An bhfuil an tAire Stáit ag éisteacht? Those are not my figures; they come from a director of Care Alliance Ireland, Liam O’Sullivan. The gap is not four, 40, 400 or 4,000, but 4 million care hours. The Minister of State should hang his head in shame. That is the gap between what is needed and the service people receive. It is a staggering indictment of the Government and its services.

The Taoiseach stood up this morning proclaiming that €17 billion is allocated to the HSE, €1 billion more than last year. It was a great pronouncement. However, that money is being syphoned off and going into a black hole. The waste is staggering and yet the most vulnerable of all are 4 million care hours short. We have plenty for the private care companies and the prices they charge. That is what this Government is all about - looking after its friends in private places, looking after the retired HSE officials and Department officials who set up their own private services even though they created the gap when they were in the service and they are allowing their own businesses to thrive afterwards. It is disgusting and I feel ashamed to be in any way associated with it.

What has the Minister provided for in this Bill that will prevent this awful situation from getting any worse? Ten years ago it was better. I know we had a crash and a crisis. During the last general election campaign all the Fine Gael talk was about recovery; that did not get it very far.

The Finance Bill also provides for the change in the 9% VAT rate for hotels, restaurants and a range of other services to 13.5%, as well as a 50-cent increase in the excise duty on a pack of 20 cigarettes. We should deal with the cigarettes in another situation. People are addicted to them. Increasing the excise duty every year is not helping the situation for some young people.

However, the increase in the VAT was outrageous. The Government was repeatedly warned. As Deputy Broughan said earlier, Dublin hotels are booming - not all of them, but the majority of them. However, anything outside the Pale is struggling. It was reckless in the extreme to increase that rate of VAT. The Government had all the warnings indicating that we are not having the same recovery. The Minister of State should know that as he comes from the south east in Wexford, which is not having the same boom and madness as there is in this city. It was stupid, foolish, shortsighted and patently wrong.

We know the reaction to this measure has been one of dismay within the tourism sector. In his budget address, the Minister said a review of the 9% VAT rate had found that the measure had done its job. What job? I remember a former Taoiseach with the slogan of "A lot done. More to do." What job? It has done the job in Dublin. Once Dublin is doing fine, to hell with rural Ireland. The old saying of Oliver Cromwell to those in the Minister of State's county and my county of "to hell or to Connacht" prevails under this Government again. It is back again as to hell or to Dublin - the high road or no road, an bóthar dorcha. Tá an bóthar glas i mBaile Átha Cliath but it is not all rosy in Dublin; there are many problems with people homeless and people trying to get a bed for the night and people trying to survive with the cost of living. We need only consider the cost of student accommodation and the disgraceful way they are being treated. These are young people we want to nurture. Mol an óige agus tiocfaidh sí. The Government forgets about that all the time.

The Minister said in the new economic reality it was appropriate to increase the rate of VAT in the tourism sector to 13.5% from January 2019. This will raise €466 million, which is a nice figure. Let us consider the damage it will do to fledgling recovering trade in places like County Tipperary, in towns like Carrick-on-Suir, Clonmel, Dungarvan and right up into Thurles, Nenagh, Borrisokane and all the smaller villages as well as the beautiful lake district in Tipperary and the famed Rock of Cashel. We are increasing the numbers, but now we are going to kill it off. The Minister could have increased it by 1 percentage point without being so greedy. However, he would not listen to anybody.

It may have done its job in some areas of Dublin and in particular the city centre, but it is absolutely the case that this measure is still needed in rural Ireland. Why could the Minister of State not make that point or does he have no say? Is all down to the sacred trio of Leo, Paschal and Eoghan, the three Dublin city slickers who hardly know where Naas is or where Monaghan is?

They know only about Dublin, selfies and spin and everything that goes with them. It was a stupid decision.

On stamp duty, section 46 of the Finance Bill 2018 provides for the extension of young trained farmer stamp duty relief for a further three years, until the end of 2021. That is welcome. Agriculture helped in the recovery of the economy after various recessions, but it has not done so this time because we are in dire straits. The measure provides for a full exemption from stamp duty on transfers of farmland to certain young trained farmers. The exemption from stamp duty has been designed to encourage the transfer of farmland to a new generation of farmers with relevant qualifications. The transfer may be by way of a gift or sale. It is a good measure. In order to be eligible, a farmer must be under the age of 35 years on the date of deed of transfer and also have attained one of the necessary qualifications. This is very important. Farmers need to be up and at it, educated, the best and the brightest. We need to be as good as those anywhere else in Europe. The young trained farmer must also, for a period of five years from the date of execution of the deed of transfer, spend not less than 50% of his or her normal working time farming the land and retain ownership of it. This is punitive enough, but I can see why it is necessary. Transfers by way of lease, or where there is a power of revocation, will not qualify for the exemption. I understand that, too. As Mr. Connor Finnerty has reported in AgriLand, some additional measures were added to the Finance Bill 2018 that had not been announced by the Minister on budget day.

Section 46 of the Bill is also being availed of to bring the legislative provisions that deal with the young trained farmer stamp duty relief and the stamp duty farm consolidation relief into compliance with the EU state aid regulations that apply to them. The provisions include requiring that a business plan be provided for Teagasc before a newly qualified young trained farmer can receive a refund of the stamp duty he or she has paid in the course of a previous purchase of land. As well as this, a cumulative lifetime cap of €70,000 will apply to the amount of tax relief or credit that can be enjoyed by a farmer by way of the young trained farmer stamp duty relief, the stock relief for young trained farmers and the succession farm partnerships tax credit. Provisions will also include a number of other technical changes to the legislation governing the young trained farmer stamp duty relief and the stamp duty farm consolidation relief to ensure they are state-aid compliant.

Income averaging and stock relief are important. They are sought by the IFA and other bodies. The Bill includes details of the income averaging and stock relief changes announced. Income averaging allows eligible farmers to calculate their taxable income as the average of their income in the current year and the previous four years on a rolling basis, thus smoothing their tax liability in a five-year cycle. This is important in a year like this - bliain uafásach, when we had a wet spring with snow, sneachta, and then a severe drought.

Certain farmers are not entitled to avail of the income averaging regime if they, or their spouses or civil partners, earn another income off the land. The amendment recently announced by the Minister will extend the scheme to such farmers. That is welcome. Averaging will apply only to farm profits. The measure will increase the number of farmers who are able to avail of the scheme. Furthermore, stock relief is a relief from income tax in respect of increases in the value of a farm's trading stock. It is allowable as a deduction of a defined percentage amount of the increase in the value of trading stock at the end of an accounting period, over and above the opening value.

The 25% general stock relief on income tax, the 50% stock relief on income tax for registered farm partnerships and the 100% stock relief on income tax for certain young trained farmers were due to expire in December. I welcome their extension, as have all farming bodies. The long-standing reliefs have been extended for a further three-year period.

I have made many suggestions in many areas. I made one about the vulture funds that were buying all of the land in my county, Tipperary, one being Coolmore. The tax reliefs are brought forward for young farmers, small farmers, to allow for the transfer of land in families. The company in question now has 24,000 or 25,000 acres. It is buying and buying. The Government has refused to reinstate the Land Commission. It has turned a blind eye because some years agao its members were all brought to Coolmore and fed and watered. It is disgusting and disgraceful. Not a perch of land can be bought in County Tipperary by any young farmer or anyone with a family farm. The vulture funds which are using Chinese and other money and which have big, fat cheque books are getting the relief. It is time to separate the chaff from the oats. The same applies to the VAT rate which applies to hotels in Dublin by comparison with those in the country. The relief scheme was not set up for these vulture funds. They are no better than the vulture funds that come in from abroad and that are victimising people who require houses. They are also buying houses and getting away scot free and laughing all the way to the bank in using this wonderful scheme which was set up for family farms. They are hijacking and abusing it. We believed the Government would change it this year, but it did not. Therefore, the vulture funds will have another 12 months to do what they like. I will be tabling amendments to the Finance Bill, as I did last year, to try to impose a 50% tax on acquisitions of land-holdings over 750 acres. The Minister knows that would be a high threshold in counties Wexford and Tipperary. In that regard, I draw attention to the figure of 27,000 acres. The vulture funds are buying up all of the straw this year, leaving all farmers without a bit to purchase. That is not welcome in Ireland. It is like having the landlords back again. I came here from the House of Commons in London this morning. The British landlords did not treat our people like this before the first shots were fired in the Civil War at Soloheadbeg in 1919. Those concerned had to pick up arms. Are we going to see something like that happen in County Tipperary, east Waterford, west Waterford, east Cork, County Kilkenny and up into Dublin to stop it? There are other vulture funds, so-called syndicates, up here. What they are doing is wrong. Is the Government so blind that it cannot see that the scheme it brought forward for good reasons is being hijacked and abused by conglomerates such as the one in question and putting ordinary people out of business?

I am glad to have an opportunity to speak to the Finance Bill. I had only two and half minutes to speak about the budget. This is a welcome change.

The Finance Bill is the statutory mechanism used to give effect to the measures announced in the budget. It is timely to reflect in a more positive way on from where we have come and how much we have developed in recent years, in addition to the great sacrifices that had to be made by the people and politicians to get where we are. There are many things that we still have not achieved; about which there is no doubt. We have a serious housing problem which affects young people and with which we have to deal sooner rather than later. I would certainly like something to be done in this area as a matter of urgency.

As much as anybody else, I am fully aware of the exigencies. I was a member of the special housing committee that met two years ago to examine how we should deal with the housing crisis in the country generally. I suggested, as I have done many times, the way to deal with the issue was to go back to the old-fashioned system of relying on local authority and affordable houses. That system was changed about 25 years ago when approved housing bodies were given the responsibility to take over from the local authorities and replace them. For my sins, I predicted at the time that this would not work, but everybody scoffed and said it was the greatest idea ever and that it was bound to solve the problem. It was said it would bring private money to the public house-building programme, without any major sacrifice. That was wrong; it did not happen in that way. All that happened was that the particular housing requirement was not met and it has not been met since. It will not be met as long as these bodies are competing. Let me outline my reason for thinking this, without meaning any disrespect to the housing bodies. In fact, the special housing bodies are very good and proved that they were very good at dealing with specific and very acute problems. They should never have been expected to deal with the thrust, body and weight of the housing requirement. Along the way some wise person decided to change the terms "local authority houses" and "affordable houses" and to use instead the term "social housing", as if identifying such housing was free in some way or other. That did a lot of damage to the efforts being made to deal with the housing crisis.

We must remember that housing provision poses an ongoing problem; it does not go away. Every year a new crop of people require housing to be provided in one form or another. Those in the lower income group are competing with those in the middle income group. They are coming downhill at the former and competing with them at the bottom of the ladder. It is a very unfair game. Neither the middle income group nor the lower income group is being satisfied and they cannot be because house prices are being controlled by one sector.

The housing crisis is being controlled by the same sector. It will never change unless there are specific changes to the structure of the housing development process and responsibility is returned to the local authorities. They must in turn be given a programme each year with targets they must meet and provide. That is easily done because all the budgetary and census figures are available. They are available in respect of the need to provide school places, public utilities and services. Housing is nothing exceptional in that regard. It is just another issue that must be dealt with.

The other issue in this regard relates to taxation in general. Local authority housing applicants who find themselves forced up the ladder to compete with others in the private housing sector in some cases end up spending up to €2,000 per month. That is a lethal situation. The affordable and local authority housing system was part of our taxation system when it was working properly. That meant the people in a particular income bracket were not forced to seek higher wages, because that is the only other way they could go. That happened in the case of benchmarking some years ago. Benchmarking was introduced to address the fact that it was not possible for people to live due to the cost of living arising from massively increasing house prices. Benchmarking was introduced in the public sector but it impacted on the private sector in turn and inflated the economy to the extent that we know what happened eventually. It should not have happened but that is the way it was.

It is no harm to reflect on the way we used to do things and on the way we appear to have got into a rut and are unable to look at the positive things that were there. It is easy for the Opposition to pour cold water on everything the Government does. It does it very well, and I am sure I did it too when I was in a similar situation. However, I have learned new ways to do it from listening to the Opposition over the last couple of years. It was always a feature of this House that there was a recognition by whoever was in opposition of the efforts of those in government in difficult times. They always gave credit for that. That has disappeared now. In fact, the only thing that happens now is that whoever is in government is blamed for everything that goes wrong and the Opposition takes credit for everything that does not go wrong - I did not say goes right, but what does not go wrong. We must learn from that. The way we debate in the House has changed, and not for the better. We should never say anything in the House that we could not say to people outside the House. That is part and parcel of what we must do if we are to establish respect for each other in the House. In return, people outside the House will have respect for the Members of the House and for each other. We were quite good at that over the years even in turbulent times but we have lost our way in that regard in more recent times.

I wish to refer briefly to the current position and the challenges that lie ahead. The Finance Bill must be viewed against international global challenges and the potential for world trade wars. When Peter Sutherland was alive he was a major player in achieving equilibrium in world trade and the WTO. He spent a great deal of time working on it and was very successful. His influence was positive and we reached a situation where small countries were no longer the minions and targeted all the time. Of course, some of the larger economies do not like that. They would prefer to have minions in their vicinity, like great white sharks and others. It is always good to have minions in their vicinity so they can rely on them for support on particular occasions. At present, there is a distinct threat of a global trade war and we must keep that in mind particularly when dealing with the budget and Finance Bill. We must recognise that the threat is ahead of us and hope that it does not get worse.

There is also the issue of any diminution of foreign direct investment here. Some Members of the House would welcome that. They will say that there should not be any foreign direct investment and that it should be elsewhere. Of course, elsewhere will always welcome that because elsewhere wants to attract foreign direct investment. It is our competitor. When we are in that situation we must recognise that not everybody is on our side.

The obvious threat of Brexit has not gone away. Its effects will not go away unless there is a change of heart in our neighbour across the water. We would all hope that there would be and that it would revert back to what prevailed heretofore, acknowledging the sacrosanctity of the Good Friday Agreement and the necessity to underwrite it and stay with it. All of us should recognise the benefits of the Single Market of more than 500 million people. It is a sizeable market in anybody's back garden, without going to the wider global sphere. Starting with a market of 500 million people is a fair advantage. We must ensure that we do not have a situation where our next door neighbour withdraws from the scene and we end up paying for it. That could happen, and we must guard against it. We will do that by being certain we retain sufficient ownership of our economy at all times so we can battle as well as anybody else in the troubled waters that might lie ahead. I have great confidence in our ability as a nation to survive in that situation.

In addition, we have a duty to look after our neighbours in Northern Ireland. We are inextricably linked economically and socially despite all the things that have happened. As the Queen said in her speech, we might be better off if some of them had not happened. Now, however, we must ensure that we do nothing disruptive. We will not do that in this jurisdiction but we must hope that in adjoining jurisdictions we do not find ourselves in a less providential situation than we had heretofore. This island must be able to trade in a Single Market, North and South, for the benefit of both the North and the South. Together we can play our part. A united Ireland aside, this is simple economics and we have a major role to play in the European Union as well.

In recent years we endured probably the most rigorous test we have ever faced, when we found ourselves broken. I am not attributing a political agenda to this because these things can happen at any time. We must try to ensure they do not happen again or that we have done our best to avert the worst excesses of what might happen. Items such as the Rainy Day Fund, while not massive, are an indication of what we have in mind at budget time and in the Finance Bill. It is a wise decision because, if need be, we will be in a position to borrow on the international markets at low interest rates. If we do things wrong and throw caution to the wind by spending injudiciously, we will not have that backing. Not even our European colleagues would be secure with that. It is important to ensure that our European colleagues have sufficient confidence in us as a nation to withstand anything that happens, and they will as long as we are prudent in how we manage our finances. We should also remember that notwithstanding the fact the IMF has withdrawn from Government Buildings, a problem still remains. We must remain alert and try to ensure that when that time comes we will recover again if we have to, we will depend on ourselves to do it and we will accept the support of our colleagues in Europe in that effort.

Debate adjourned.

The Dáil adjourned at 11 p.m. until 10.30 a.m. on Wednesday, 24 October 2018.

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